IN FOCUS: GEVO, INC. AND THE RENEWABLE HYDROCARBONS MARKET AND THEIR RENEWABLE GASOLINE/ISOOCTANE

The alphaDIRECT Insight

We believe that the demand for low carbon fuels, including renewable gasoline/isooctane, will continue to increase as more industries and companies look to reduce their GHG emissions and lower their overall carbon footprint (decarbonization) in order to comply with more stringent regulations as well as higher levels of corporate responsibility and accountability. We believe GEVO has a critical solution to help companies achieve their goals. Specifically GEVO is able to replace the fossil-based carbon in gasoline with a renewable carbon, while also eliminating the sulfur and particulates. This in essence provides a fossil alternative to octane, alkylate and reformate. The total available market for this product is significant and over the short-term Gevo plans on targeting the mainstream (alkylate) gasoline market as they work on lowering the cost of production and building out their plant in Luverne. With partners such as Haltermann Carless, we believe that Gevo is well positioned to continue to grow demand for their product and maintain its industry leading position.

Shawn Severson: Thank you very much, Pat, for taking the time to speak with us today. Last time we discussed the Fly Green Day at Chicago O’Hare. Today’s focus will be on the renewable hydrocarbons market and renewable gasoline/isooctane. However, before we get started could you start by walking us through the value chain for renewable hydrocarbons and briefly explain what a renewable hydrocarbon is and how it is produced?

Pat Gruber: Absolutely, Shawn. I believe the demand for low carbon fuels is increasing. This is often referred to as “decarbonization” which means reducing or replacing fossil carbon with renewable carbon and thereby cutting fossil based GHG emissions. If the process is done right, like our Gevo technology, it’s possible to get the benefit of eliminating sulfur and particulates too.

So, when looking at the big targets for decarbonization of fuels, we have gasoline, jet fuel, and diesel. Fully renewable, low carbon gasoline is a massive target for us. Here we are not talking about increments of adding ethanol or even isobutanol. Instead, we are replacing the fossil-based carbon of the gasoline itself with renewable carbon. At Gevo, we fractionate grain into the protein and feed, and use the residual lower-value carbohydrates for fermentation to produce isobutanol. The isobutanol, a very versatile chemical intermediate, is then chemically transformed into isooctane – a form of renewable gasoline. It is interesting to note that producing isooctane(isooctene) /gasoline in this way produces large quantities of protein and feed for the food chain, approximately 5kgs/gallon of products.

Shawn Severson: Can you explain how Gevo’s isooctane is different from other renewable gasoline fuels on the market today and also talk about your value proposition for this application?

Pat Gruber: We actually are unaware of other comparative renewable gasoline alternatives and we believe the market is valuing our product as a fossil alternative to octane, alkylate or reformate mainly due to its ability to decarbonize and reduce sulfur emissions. Ethanol and isobutanol are both used as oxygenates and blend stocks, but neither is “gasoline” per se. With our technology we’d be making isooctane/gasoline, the real stuff, albeit cleaner and with a lower carbon footprint.